William Dudley, president and chief executive of the New York Federal Reserve. Photo Credit: AP

The Federal Reserve System may delay until late 2015 its plans to raise interest rates because of China's slowing economy and the resulting turmoil on Wall Street, a top decision-maker at the central bank said Wednesday.

William Dudley, president of the Federal Reserve Bank of New York, told reporters that he still wants to raise rates this year, but a hike next month "seems less compelling to me than it was a few weeks ago."

The Fed hasn't increased interest rates since the onset of the 2007-09 recession.

Dudley said he and other members of the Fed's interest rate-setting Open Market Committee are closely following reports about the U.S. economy and inflation as well as the roiling stock markets, and developments in China and other previously fast-growing countries.

Dudley serves as vice chairman of the committee, which is led by Fed Chair Janet Yellen.

He urged caution in evaluating the effects of recent stock market declines. "It's important not to overreact to short-term [stock] market developments, because it is unclear whether this will just be a temporary adjustment or something more persistent that will have implications for U.S. growth and inflation," Dudley said at a news briefing in Manhattan on regional economies.

Dudley, a former chief U.S. economist for the Goldman Sachs investment bank, acknowledged prolonged declines in stock prices could impact the U.S. economy by causing consumers to reduce spending because they feel worse off. Consumer expenditures represent about 70 percent of economic activity.

"The stock market really has to move a lot and stay there for it to actually have implications for the U.S. economy," he said.

Recent economic reports suggest the U.S. economy continues to expand "at a moderate pace," Dudley said, adding that the past week's Wall Street gyrations aren't in response to domestic events, as they were in 2007-08 during the financial crisis.

"What we're seeing is not a U.S. problem," he said. "This isn't about us. This is about developments abroad, and I think what we have to assess is how those developments abroad could potentially impinge on us."

Dudley also said he was "reasonably confident" that China's leaders would continue that nation's conversion from an economy based on investing to one based on consumption.